BVWM European Policy Development Group:

Position Paper – Implementation of Common Agricultural Policy reforms within the West Midlands Region

September 2004

Background

The reforms, announced by the Government in February 2004, represents the most radical change in agricultural support since 1947, when guaranteed prices for food were introduced following the wars. With the reforms due to come into operation from 1st January 2005, this will effectively decouple agricultural support payments from production.

This support will be replaced by a new 'Single Payment' to producers that will be conditional on the adoption of a programme of environmental and land management measures known as 'Cross Compliance'. Producers will be free to use their land in any way they choose, provided that use is of an agricultural nature.

There will be separate rules governing the payment and calculation of the Single Payment for England, Wales, Scotland and Northern Ireland. In England, the payment will be based both on the historic claims experience of individual producers in the reference years 2000 – 2002 as well as a flat rate payment based on all the land in England that is used for an agricultural purpose, other than trees and permanent crops.

Between 2005 and 2012 there will a phased restructuring of the two components of the payment, from one which is based on 90% of the historic claim and 10% of the Flat rate to 100% Flat Rate only in the final year of the scheme.

The Need for CAP Reform

The NFU and CLA has for some years been advocating a change to introduce decoupled support payments as being in the long-term best interest of the UK industry. The policy will lead to a shift away from 'subsidy' led production to production which is essentially 'market focused' and based on customer demand. This will allow producers to become more competitive both within the EU and world markets. The decoupling of support payments is also a critical factor in progressing discussions within the WTO. The CAP reform has considerably strengthened the EU's position in the current round of talks. On a more local level, the change provides an opportunity to significantly reduce the complexity and bureaucratic burden associated with the current multi-scheme system.

The Current Position

Producers who have made historic claims during the reference years will now have received their individual 'Information Statements' setting out details of the payment records. As this data will be used to calculate the individual's Single Farm Payment, producers are being asked to confirm that the data is correct and if appropriate, add any amendments from the farm records. 28 days have been allowed for the return of these forms. It is regrettable that a very considerable number of producers have not received their data because of processing difficulties. These producers will have their data manually produced and the backlog may not be cleared until early October.

Proposed Council Position

The reforms have a direct and immediate impact upon the development of the West Midlands rural economy. Therefore, in the light of the implications for CAP reform for the rural sector – and therefore for the whole of the regional economy, the Council could adopt the following stance to ensure the needs of rural businesses are fully considered by central Government and regional agencies:

a) The new arrangements come into force on 1^st January 2005 and producers are required to return their claim forms for the Single Payment by 15^th May 2005. In spite of this tight time schedule, the working details of the new scheme have not yet been fully clarified as Government seeks to understand and interpret the regulations. Many of the significant issues on which information is needed to enable farm businesses to plan ahead for the coming year are still subject to deliberation by the Department for the Environment, Food and Rural Affairs. These include the detailed rules on matters such as 'set-a-side', cross compliance, 10-month occupancy, 'permanent pasture' and the National Reserve. The Council urges the Government to clarify these issues as a matter of urgency with the national business representative bodies such as the CLA and NFU.

b) A particularly important issue for the West Midlands Region is the complete lack of information on how Cross Border (England/ Wales) holdings will be dealt with. Not only are there different administrative authorities for the two regions but also the scheme rules differ to a marked extent in terms of the calculation of the single payment. The Council urges the Government to clarify this issue as a matter of urgency with the national business representative bodies such as the CLA and NFU.

c) There is also concern with the impact that the new rules are already having on the availability of land to let for the short term. The Department for the Environment, Food and Rural Affairs needs to clarify as a matter of urgency clarification as to the practical operation of these new rules with the national business representative bodies such as the CLA and NFU.

d) Although some elements of the Cross Compliance rules have been announced, the component dealing with soil management and particularly the individual soil management plans are still subject to discussion. The offer by Government to consult closely with the national business representative bodies on the development of the proposals is welcomed and the Council supports early clarification of this issue.

e) We are greatly disappointed that the Government chose to ignore the industry view on the application of the 2m.field margin rule alongside hedges and watercourses and included this as a mandatory requirement under cross compliance.

This should properly have been included as an option within the new Agri-Environment Entry Level Scheme due to be launched next year. Indeed, the availability of this option would have been a critical factor in persuading producers to enter their land into the scheme. The Council encourages the Government to keep the door open for further discussion with national bodies in the coming months.

f) There are opportunities in leisure, tourism, recreation, energy crops and non food crops that will be identified and delivered as the market requires. The West Midlands need to ensure that the infrastructure will allow the development of the rural areas and the planning system accommodates the changes that are necessary.

g) Expanding businesses may be adversely affected in the short term due to these changes. Therefore regional agencies need to factor this issue in the development and implementation of their policies if the Regional Economic Strategy is to lead to business growth in rural areas.